Rupee rebounds as SBP curbs certain outflows

• Local currency closes at Rs176.67 against the greenback.
• Rupee has depreciated by 12.14% since July 1, 2021.
• Foreign exchange reserves fall 0.95% on a weekly basis.

KARACHI: Pakistan currency recovered slightly against the US dollar on the last day of the trading week after the State Bank of Pakistan (SBP) tightened up regulations on foreign currency transactions in an attempt to prevent the local unit from falling further.

According to the central bank, the local currency closed at Rs176.67 compared to its last close of Rs176.2 against the US currency a day earlier.

The rupee also bounced back in hopes that after approval of the supplementary finance bill will help Pakistan secure a $1 billion loan tranche from the International Monetary Fund (IMF) which will improve the demand and supply parity.

The rupee has maintained the downtrend for the past seven months. It has lost 16.02% (or Rs24.4) to date, compared to the 22-month high of Rs152.27 recorded in May 2021.

With a fresh rise of 0.14%, the rupee has depreciated by 12.14% (or Rs19.13) since the start of the current fiscal year on July 1, 2021, data released by the central bank revealed.

It is pertinent to mention here that the local unit hit an all-time low of Rs178.24 on December 29.

Earlier this week, to stabilise the inflow of foreign exchange, the SBP had directed exporters to bring proceeds within 120 days from the date of shipment.

According to a notification issued in this regard, the central bank had said: "To improve the timely inflow of foreign exchange from exports proceeds in the market, SBP has amended foreign exchange regulations requiring exporters to bring export proceeds within a maximum period of 120 days from date of shipment."

Meanwhile, the foreign exchange reserves held by the central bank fell 0.95% on a weekly basis.

On December 31, the foreign currency reserves held by the SBP were recorded at $17,686 million, down $169 million compared with $17,855.3 million on December 24.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $24,018.8 million. Net reserves held by banks amounted to $6,332.8 million.